Here's How Major League Baseball Teams Are Fighting The Secondary Ticket Market

Last season, Major League baseball teams filled their stadiums at 70% of capacity, which means that for most games, tickets could be had on the secondary market for under $10.  In addition to undercutting the prices available from the box office, these low prices have a negative impact on fan’s perception of the team brand.  If Cubs tickets are available for $5, the argument goes, everything else about the team and brand is also cheapened.  In order to combat these lower prices, teams are resorting to an interesting and counter-intuitive tactic: selling less tickets.

In the baseball world, teams have close to three million seats to sell each year.  It’s a daunting task even for the best teams in baseball, and last year not a single team filled all of their seats. That was the first time that happened since 2005. In 2005, the Cubs came closest to selling out, filling Wrigley Field at 98% of capacity.  Last year, the reigning World Champion Giants came closest, selling 99.2% of all possible Giants tickets. St. Louis Cardinals tickets were next closest at 94.6%.  While 2013 was only the third season in the last 10 where no team sold out 100% of inventory, going forward it’s only getting harder to bring fans out to the ‘old ball game.’ In a world of 60-inch screens, teams seem to be resigned to the fact that selling out is no longer an option, and rather than flooding the market with inventory that gets priced down by brokers, they’re holding back a lot of tickets.  The result is secondary market prices that are unexpectedly high for some teams that are not often associated with expensive tickets.

Case and point is the Astros, Marlins and Cubs.  Last season, these three teams combined for 317 losses, an historically bad mark.  Despite that poor performance, 2014 Houston Astros tickets have an average price on the secondary market of $103 while Cubs tickets average $101. None of those, however, can compete with the $138 average price for Marlins tickets.  At $138, the average price for Marlins tickets are lower than only Yankees tickets and Red Sox tickets.  While the Yankees and Red Sox both have approximately 1 million tickets on the secondary market for sale, someone looking to buy Marlins tickets on the secondary market could find only 85,276 tickets for sale.  Most of those tickets are for lower level seats, and in fact, you can’t even buy tickets for the Upper level of Marlins Park, anywhere. That said, if you’re looking to get a cheap ticket to see the Marlins play, you’re best option is to get tickets directly from the Marlins, which is exactly the point.

Over the last 10 years, the Secondary ticket market has become the defacto buying channel for concert tickets as well as sporting tickets. No other market has been impacted as significantly by the secondary market as MLB tickets.  With the need to sell almost 100 million tickets each summer, baseball teams are burdened with the task of filling their stadiums with the equivalent of one-third of the country’s population every year.  With all that available inventory, fans have been conditioned to not even think about checking the box office--once the only place to buy tickets.   Instead, fans have been trained to find one of the hundreds of websites out there that are doing their best to get fans the cheapest ticket possible.  That ticket is often being sold by a broker, who may be a season ticket holder and willing to lose money on 80% of the games with low demand in hopes that his investment makes it to the playoffs where the real money can be made.  As a result, teams don’t actually know who their real fans are since those fans don’t actually have to interact with the team to get into the stadium.  By limiting the supply of inventory, teams are hoping to reverse that trend and drive fans back to the box office.  Once there, teams can reestablish the connection and begin to disintermediate the disintermediators.

Of course, not all team subscribe the philosophy of limiting supply.  Currently, there are six teams in Major League baseball that have over 1 million tickets listings available for sale across the secondary market.  LA Dodgers tickets lead the way with almost 2.7 million ticket listings across all the major exchanges. Next closest are San Francisco Giants tickets, for which there are over 2.1 million ticket listings available.  Nationals tickets are next with 1.3 million tickets.  In the American League, Yankees tickets lead the way with 1.1 million listings, followed by Red Sox and Angels tickets. In the American League, the Astros have responded to their 111-loss season in part by keeping as much supply off the market as possible.  They only have 140,000 tickets available for sale.  The next two closest teams in the American League are the Athletics and Rays.

The A’s are an interesting case because they had a great season and made the playoffs.  As they did in the post-season, the A’s are playing the ticketing version of Moneyball that they are so well known for.  By holding back inventory, The A’s will keep more of the upside for themselves if the team plays well. In the past, they would have likely sold as much inventory as possible to brokers and let them worry about upside.   In the modern age, the A's  are able to capture that upside themselves because they are one of the many teams in major league baseball that use dynamic pricing. Dynamic pricing is a technology-based system that allows teams to change the price of every ticket they sell when they want, as often as they want.  By limiting supply in the marketplace, the A's will likely make less money early in the season, but as baseball fans know, baseball is a marathon, not a sprint.  If the A’s come anywhere close to repeating their success last season, summer demand will be hot, and when it is they’ll be able to raise prices for their product. If that’s how it plays out, they’ll likely do a lot better than they did last year when then the drew only 22,000 to O.co Coliseum. If they do, they’ll be writing another book on smart baseball management, this one about how a team with a recent-history of losing clears the deck and sets up a ticketing business that increases upside based on the thing that matters most to fans: winning.